A few days ago, I attended a programme related to the Institute of Federalism at Madhesh University. During the event held in Rautahat, some participants questioned me about my stance on universities. They noted that when I was a member of Parliament, I opposed the proliferation of universities in Nepal, yet now I support Madhesh University. Their concern was valid, and I welcomed the opportunity to clarify my position.

When I served in the National Assembly, I was the only member who voted against establishing new federal universities. My argument has been based on the constitutional framework. The Constitution of Nepal grants provinces the authority to set up and manage provincial universities. With over a dozen universities already under federal jurisdiction, adding federal universities appears unnecessary. Instead, provinces should lead the creation of universities tailored to their specific needs and provide sufficient justification.

However, I have consistently emphasised that the federal government’s role should focus on forming a comprehensive higher education policy and an umbrella act for universities. This would create a clear framework for both federal and provincial governments to work together in expanding higher education. Without such a policy and legislative framework, the uncoordinated establishment of universities could strain resources, duplicate efforts and compromise quality.

The federal government allocates funds to universities through the University Grants Commission (UGC), and at the provincial level, funding comes via fiscal transfers. However, if the trend of opening new universities continues, having both federal and provincial institutions compete for UGC grants and redirecting funds away from provinces and local governments to the UGC will undermine the purpose of establishing new universities at either the federal or provincial level.

Addressing the broader issue of the Ministry of Education’s budget allocation is crucial to understanding where the federal education budget is spent, how much is retained at the federal level, and how much is allocated to provinces and local governments. This in turn helps us examine the UGC’s role in managing these funds at the federal level. Understanding these dynamics is essential for creating a more effective and equitable education system in Nepal.

In the fiscal year 2024-25, the Ministry of Education received Rs203.66 billion, with 28.33 percent (Rs57.70 billion) directed to the federal level, 2.26 percent (Rs4.61 billion) to the provinces and 69.41 percent (Rs141.36 billion) to local levels. Analysing the federal allocation of Rs57.70 billion reveals distinct trends. The UGC leads federal education spending, with its share rising from 23.5 percent in FY 2019-20 to 33.21 percent in FY 2024-25. However, most of this funding is used for operational activities rather than research and innovation. School teacher pensions also comprise a significant portion, accounting for 32.93 percent of the federal budget, limiting investments in infrastructure and innovative programmes.

The Central Implementation Unit (CIU), with Rs460 million (7.97 percent), manages major education projects, including externally funded initiatives, but there are concerns about its centralised resource management. The Medical Education Commission (MEC) has seen a notable rise in its allocation, from 1.38 percent to 8.96 percent, reflecting a focus on healthcare workforce development. However, the issue of scholarship recipients often leaving Nepal for better opportunities abroad remains challenging.

There has been a slight decrease in budget for programmes such as the Higher Education Promotion Programme (HEPP) and the School Sector Development Programme (SSDP), with overlapping roles between HEPP and UGC causing inefficiencies. The SSDP, later replaced by the School Education Sector Plan (SESP), shifted more funding to provincial and local levels, limiting federal involvement to training, administration and curriculum development. Meanwhile, allocations for the President’s Education Reform Programme (1.52 percent) and the Center for Education and Human Resource Development (CEHRD) (1.47 percent) have been criticised for impractical implementation and centralised budgeting.

The President’s Education Reform Programme has bypassed the decision-making authority of local governments. The programme often selects school projects at the federal level, with funds allocated to constituencies linked to influential figures. For instance, in FY 2023-24, Education Minister Devendra Poudel directed a large share of the budget to his home district, Baglung, benefiting 143 schools (Kantipur, March 28, 2024). Similarly, in FY 2024-25, the programme prioritised earthquake-affected schools in Jajarkot and Bajhang. Such practices have raised concerns about equitable resource distribution and the programme’s alignment with decentralised governance principles.

The Council for Technical Education and Vocational Training (CTEVT), which manages technical and vocational education, received Rs159.59 million (2.77 percent), indicating slow progress in expanding vocational education. Despite increased funding for coordination units like the Education Development and Coordination Unit, the federal budget prioritises pensions, operational activities and centralised programmes over transformative reforms or addressing systemic gaps. These trends suggest the need to reevaluate federal spending to balance decentralisation goals with efficient resource use and equitable education improvements across all levels.

At the provincial level, the FY 2024-25 education budget is Rs4.61 billion (2.26 percent of the total Ministry of Education budget), allocated through a conditional grant from the federal government. The CTEVT dominates provincial allocations, receiving 78.4 percent of the total, highlighting a focus on vocational education and technical training, crucial for developing a skilled workforce. Despite its devolved functions, the National Education Board (NEB) receives only 7.3 percent of the provincial budget, suggesting that its activities remain centrally managed, limiting provincial autonomy.

In FY 2024-25, 69.41 percent of Nepal’s Ministry of Education budget—Rs141.36 billion—was allocated to local governments as conditional grants. A large portion of the local education budget, 78.21 percent (Rs. 110.60 billion), is directed toward teacher salaries. This allocation supports community schools comprising 85.1 percent of Nepal’s 27,990 schools. Most of this salary budget (68 percent) is spent on basic-level teachers for Grades 1-5, where 67.3 percent of students are enrolled. While prioritising teacher salaries ensures operational continuity, it restricts the local government’s ability to fund other pressing needs. Globally, decentralisation models advocate for more diversified budget allocation to address broader educational challenges effectively.

Programmes like day meal initiatives, which help retain students and address malnutrition, receive only 5.99 percent of the budget (Rs8.47 billion). Free textbook grants, including materials in local languages, account for just 2.7 percent (Rs3.81 billion). These essential programmes suffer from limited funding, particularly in underserved communities.

Similarly, funding for infrastructure and educational quality is severely inadequate. Only 1.34 percent of the budget goes to school operation and management grants; performance-based incentives for improving educational outcomes account for just 2.17 percent. Less than 2 percent is allocated to school construction, hindering efforts to modernise and enhance learning environments, particularly in rural areas.

The rigid structure of budget allocations under the SESP, with over 91 percent of the budget locked into predefined programmes like salaries, meals, and textbooks, limits local governments’ autonomy to create initiatives tailored to their communities’ specific educational needs. In contrast, international best practices grant local authorities greater decision-making power, enabling them to effectively address diverse and evolving educational demands.

Minimal investment in alternative education, digital learning and innovative programmes—each receiving less than 2 percent—also emphasises the need to align local budgets with modern educational goals, such as technology integration, bridging access disparities and fostering innovation.